Havells India (On course, BUY):
Electrical consumer-goods major Havells is a beneficiary of robust demand growth based on upgrading consumer preferences and increased construction activity in its key verticals—switchgears, lighting fixtures, consumer durables (fans) and cables/wires. Consolidated leverage is set to decline, with its European lighting-fixtures acquisition Sylvania looking to break even in FY12, post restructuring. The stock’s current P/E multiple of 12.0x on FY12ii is reasonably attractive, given an EPS CAGR of 17.2% over FY10-13ii, and our TP of Rs475 (ascribing zero equity value to Sylvania) indicates 19% upside. We reiterate our BUY recommendation.
